After an all-night round of talks among Eurozone finance ministers, Greece was granted its second bailout, this one for €130 billion, in a package that includes recently passed austerity measures and a debt restructuring. But confidential reports distributed to the finance ministers indicate that the deal will not work and may even be counter-productive.

This a.m. Atrios highlights an op ed at the Financial Times by Wolfgang Münchau pointing out that Greece now faces the bitter choice of defaulting if it wants to preserve any pretense of democracy and national sovereignty. That follows a week or more of intimidating and insulting comments by German financial minister Wolfgang Schäuble and others

New statistics out of Greece show that austerity shrunk the economy more than expected last year. GDP in Greece fell 6.8% in 2011, and a slightly faster 7% in the fourth quarter. The country is in a fifth straight year of recession, approaching a full-on depression.
European leaders are still trying to impose more austerity, but some Eurozone finance ministers may be trying to force a default and exit from the euro.

This must be the day when everything gets sewn up into neat little packages. The Greek government has announced a deal has been reached to secure their second bailout, though one junior partner has not confirmed agreement. The head of the European Central Bank is saying a deal has been done as well.

Yesterday, 25 of the 27 Eurozone countries signed a fiscal consolidation pact that almost immediately drew scorn from observers as inadequate and largely irrelevant to the problems of the continent, including the absence of growth stimulus policies and means to address internal trade imbalances.

The debt talks between Greece and their bondholders, thought to be a done deal late Friday, spilled into the weekend and still found no resolution as of today. The short version is that the creditors want a higher coupon, or interest rate on the new bonds they’ll accept in exchange for taking at huge hit on the bonds they currently hold.

When Standard and Poor’s downgraded nine European countries last Friday, they said plainly that European leaders were blinding themselves to the full crisis, ignoring the trade imbalances between core and peripheral Euro nations. But Germany’s Merkel doubled down on austerity, which has created a depression in Greece, with huge risks of default.

The Greek bailout is in trouble, threatened by a disagreement between the ECB and Germany and France who are threatening not to release the next tranche of bailout funds. The Greek government has no leverage, and any default will hurt mainly the Greek people.

A variety of links to articles/interviews on current topics that may, or may not, be of interest.

Euro nations are facing a tough economic year in 2012, driven by Euro leaders’ insistence on austerity programs that are depressing their economies but not solving their debt problems. A broad recession seems likely.